The death of Israeli minister Rehavam Zeevi pushes the Middle East towards a new level of instability - at a time when calm in the region is a priority to Israel's US ally as it conducts its "war against terrorism".

It is the first assassination of a ranking Israeli politician since Yitzhak Rabin's in 1995 and - given the claim of responsibility by Palestinian militants - the first by Arab hands for much since the establishment of Israel in 1948.

Sharon: "A new era has started, and what was before will never be again"

Israeli Prime Minister Ariel Sharon appears to view killing as Israel's equivalent to the 11 September attacks on the United States - something which heralds a "new era", after which nothing will ever be the same.

Meanwhile, Palestinians see parallels with Israel's assassination of the leader of the Popular Front for the Liberation of Palestine leader Abu Ali Mustafa in August.

The PFLP has been quick to claim responsibility for the attack, but Yasser Arafat's Palestinian leadership has condemned it, and called on Israel to end its policy of "targeted killings" of Palestinians, which has ended the lives of dozens of activists this year.

Life after 11 September

The assassination came as Mr Sharon faced his first major coalition crisis since forming a unity coalition government earlier this year.

By an almost unbelievable coincidence, Mr Zeevi had been due to leave the cabinet only hours before his death.

His resignation - at the government's "soft line" on the Palestinians - did not threaten Mr Sharon's comfortable 32-seat majority - which has 76 seats in the 120-seat Knesset - but it did leave the coalition exposed to further defections on the right.

Washington had been hoping that the shock of the 11 September suicide attacks would force the Israelis and Palestinians to abandon the violence that has raged since September last year.

How did the gunmen gain access to a hotel frequented by politicians

Instead, there is now a paradoxical situation in which the overall level of violence has gone down - but vendetta-style killings go on, with Wednesday's assassination following the deaths of two, or possibly three, members of the militant Islamic group Hamas, killed by Israel in recent days.

The danger now is that - despite continuing calls for restraint from Washington and other capitals - Mr Sharon will feel that such an act demands strong retaliation.

But searching questions must also be asked about Israel's security apparatus, even if this form of political violence has not been faced before.

How did gunmen manage to gain access to a hotel frequented by political figures and to the room of such a controversial anti-Arab figure as Rehavam Zeevi?

Memories of 1982

Some in Israel have already started to draw parallels with the near-fatal shooting by a Palestinian gunman of Israeli ambassador to London Shlomo Argov in 1982 - an event which triggered Israel's bloody invasion of Lebanon, presided over by the then-Defence Minister, Ariel Sharon.

Zeevi criticised government for being "too soft" on Palestinians

Then, as now, Israel blamed Mr Arafat for something that many believed to be out of his control.

The Palestinians say that politically they are not in a position to arrest the militants Israel wants them to while there is so much public anger over the continuing "targeted killings".

Nevertheless Israeli officials have now threatened severe retaliation for what they see as an escalation of Palestinian terrorism.

Health Minister Nissim Dahan said: "I want to remind the public that after an attack of a diplomat [Argov] at an embassy, a war broke out."

It could therefore prove ironic that, on the day he died, Zeevi was due to leave the government in protest at a loosening of Israel's grip on the Palestinian territories, while his death might herald a stiffening of the government's resolve to take harsh measures against the Palestinians.